The Takeover Panel has published a consultation paper on acting in concert under the Takeover Code (PCP 2022/2).
Acting in concert is a core concept under the Code. The Takeover Panel wants to be able to identify when parties are co-operating to obtain or consolidate control of a company, or to frustrate the successful outcome of a bid. Concert party members are, in effect, treated under the Code as a single person and so their interests are aggregated for the purposes of determining whether, for example, a requirement to make a mandatory offer under Rule 9 of the Code has been triggered. The definition of "acting in concert" lists categories of people whom the Panel will presume are acting in concert (although it is open to parties to rebut the presumption).
Under the current definition, a company, its parent, subsidiaries and fellow subsidiaries and their associated companies, and companies of which such companies are associated companies, are all presumed to be acting in concert with each other. For this purpose, ownership or control of 20% or more of the equity share capital of a company is the test for whether a company is an "associated" company.
The Panel considers that there are a number of issues with the current definition, including that the 20% threshold for associated companies is too low and the presumption only looks at the equity share capital held, rather than the voting rights, whereas in practice control of voting rights may be more significant.
The Panel is therefore proposing to:
- raise the threshold from 20% to 30%; and
- make explicit that the presumption of acting in concert applies to interests both in shares carrying voting rights and in equity share capital (albeit the threshold will apply differently to each of them).
It is also proposing to make changes to how the acting in concert definition applies in other situations, including for fund managers, investment funds (such as limited partnerships) and investment trusts.
The consultation closes on 23 September 2022. The Panel then intends to publish a response statement setting out the final amendments to the Code in late 2022, with the rule changes coming into effect two months later.
We discuss the proposals in more detail in this briefing.
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